Tom and Tilly shared profits and losses equally until I September 2004 when they agreed that Tilly would be entitled to a salary of $10 000 per annum from that date. Profits and losses would continue to be shared equally. 

The partnership Balance Sheet at 31 March 2004 was as follows.

The partners agreed that the assets should be revalued at 1 September 2004 as follows.

Required 

(a) Prepare journal entries to give effect to the revaluation of the partnership assets at 1 September 2004. 

(b) Prepare the partnership Balance Sheet as at 1 September 2004 to include the effects of revaluation of the assets.

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Fixed assets at net book values Freehold premises Fixtures and fittings Office equipment Current liabilities Stock Debtors Bank Current liabilities Creditors Capital accounts do Tom or Tilley 17 000 4.000 6.000 27 000 3.000 40 000 18.000 7.000 65.000 24 000 89 000 48 000 41 000 89 000